1. The Eurozone context Is there a proper identification of the crisis’ causes? Lucian Croitoru

2. Source: Eurostat, US Department of Commerce, WEO Database, Bloomberg

4. What is the nature of the crisis? The fiscal malfeasance? The balance of payments crisis? The decisions should be different, depending the nature of the crisis The European leaders think of a fiscal nature of the crisis Based on data, one may think of a balance of payments crisis If the competitiveness is the real problem, than the solutions are of two folds: An external adjustment. Specifically, shifts in competitiveness Looser macropolicies to alow higher inflation and higher credit growth in surplus countries

5. Budget deficits and public debts

6. Red for 2009-2010 Blue for 1997-2007

8. Greed for 1990-1998 (average, % of GDP) Blue for 1997-2007 (average, % of GDP)

9. Current account deficits

10. Red for 2009-2010 Blue for 1997-2007

11. Green for 1990-1998 (average, % of GDP) Blue for 1999-2007 (average, % of GDP)

12. Blue for 1997-2007 Red for 2009-1010

13. Unit labor costs

14. Blue for LP Red for NCE

15. Blue for LP Red for NCE

16. Blue for LP Red for NCE

17. Conclusions from comparing fiscal deficits, public debt and current account deficits Cash deficits select well Greece. But fail to select any other country if the 1999-2007 average fiscal deficts is considered Public debt is also a imprecise measure: it rightly picks up Greece, Italy, Belgium and Portugal. But fails to pick up Estonia, Ireland and Spain, which performed better than Germany before the crisis The current account deficits picks up Greece, Portugal, Italy, Ireland, Spain.

18. Key decisions include No compelling for private bondholders to take losses on euro-zone bail-outs. But voluntary restructuring remains Some degree of automaticity of sanctions on countries that fail to stay within the limits on budget deficits Requirements for balanced budget into domestic legislations Introduction of the ESM in June 2012 Monthly meetings of European leaders to oversee policy co- ordination